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And the
chicanery continues… Bush, an Opponent of Raising
Taxes, Proposes $47 Billion in Fees By Brian Faler, Bloomberg News Services,
March 1, 2006 While President George
W. Bush is adamantly against raising taxes, he's increasingly comfortable with
imposing billions of dollars in new government fees, as the airline,
commodities and shipping industries have discovered. Bush's 2007 budget proposal would raise more than $47 billion
over the next five years by imposing, raising or extending expiring fees on
everything from airline tickets to oil drilling to commodity transactions to
ships passing through the St. Lawrence Seaway. ``It's a way for the
administration to get around its `we'll never-raise-taxes' attitude,'' said
Stan Collender, managing director of the Washington office of Financial
Dynamics, a business-consulting firm. Bush won't suffer
politically from what is essentially a tax increase, because he has backed
extending even larger tax cuts, said Grover Norquist, a prominent anti-tax
activist. ``A tax increase offset
by larger tax cuts may or may not be a good idea, but it's not a sin,''
Norquist said. Administration
officials said the fees shift the costs of programs from taxpayers to the
industries and individuals that receive government services. Opponents call the
new charges thinly veiled tax increases that are unlikely to be approved by
Congress. The government
collects billions of dollars each year in fees in the form of postage stamps,
Medicare premiums, entrance tickets to national parks and scores of other
charges. Last
year, those fees totaled more than $185 billion, the equivalent of about 8% of
the government's $2.4 trillion budget. The administration's proposal would impose $3.4 billion in
new fees next year, growing to $15 billion in 2008 before shrinking to $8.7
billion in 2009. Airlines,
Oil and Gas
The increases would hit a host of
industries next year. The administration wants to double the security surcharge
on airline tickets. It wants to charge oil and gas companies $4,000 to process
permits to drill on federal lands. It wants to charge the meat, poultry and egg
industries more for federal safety inspections and increase federal
medical-care charges for some military retirees. ``User fees help match the cost of government programs
with those who benefit from them,'' said Scott Milburn, a spokesman
for the White House's Office of Management and Budget. ``It's not reasonable
for all Americans to bear the entire cost of government activities from which
they only receive a partial benefit,'' he said. Commodity
Futures
Industries subject to the new fees see the issue differently. John Damgard, president of the
Washington-based trade group Futures Industry Association, said an
administration proposal to raise $127 million next year through a new fee on
commodity futures and options contracts amounts to a new ``transaction tax.'' Goldman Sachs Group
Inc., the world's second-biggest securities firm by market value, and Morgan
Stanley, the third- biggest securities firm, are among companies represented by
the trade group. ``You tax us on the money we make, don't tax us on how we make
our money,'' Damgard said. The fee would apply to
approved exchanges and is intended to cover the cost of government regulation
of the industry. The Commodity Futures Trading Commission is the only federal
financial regulator that is not funded by the organizations it oversees. `Drive Business' Damgard said the administration's proposal would hurt the
futures industry. ``This will drive businesses to markets where they do not
require the tax,'' he said. Lawmakers, including
Democrats such as Representative David Obey of Wisconsin and some Republicans,
said the proposals amount to accounting gimmicks that enable the administration to
claim it's holding the line on spending without having to sacrifice popular
programs.
House Appropriations
Chairman Jerry Lewis, a California Republican, wrote in a memo to his
colleagues that the ``proposals make a difficult appropriations season even
harder.'' ``They allow the
administration to artificially inflate programmatic priorities (and
expectations) while at the same time touting a `fiscally conservative' top-line
budget number,'' Lewis wrote last month. Explosives Bush also has proposed a new fee on explosives manufacturers
that some industry officials said would be excessively costly. Chris Ronay,
president of the Institute of Makers of Explosives, a Washington-based trade
group, said a proposed 2 cents a pound fee on explosives equals about 12% of
the cost of the product. ``It is
monumentally expensive compared to what people pay today,'' Ronay said. The administration
said the fee would generate an additional $120 million needed to help fund the
Bureau of Alcohol, Tobacco, Firearms and Explosives, which regulates the
explosives industry. Airlines are targeted
by a proposal to increase the security surcharge on tickets. ``At the end of
the day, the money has to come from somewhere,'' said Transportation Security
Administration Director Kip Hawley, defending the proposal at a congressional
hearing last month. ``Our sense is that it's
fair to have that part of it come from the air passenger.'' A
Public Good
The industry has rejected that
argument, contending that airline safety is a public good. ``Aviation security
is a function of national security and should be paid as such,'' said James
May, president of the Washington-based trade group Air Transport Association,
which represents companies such as AMR Corp.'s American Airlines and UAL
Corp.'s United Airlines. For some lawmakers,
the fees are an obstacle to putting together the federal budget. ``Here's what tees me
off,'' said Representative Harold Rogers, a Kentucky Republican, at a Feb. 16
hearing. ``OMB and the department, knowing
that you cannot pass a tax, instead build it into the budget and puff up the
budget, then dump it on the laps of this committee, and we've got to find a way
out of the mess that you've made.'' Damgard said Bush
should take a lesson from his father, who as president publicly promised not to
raise taxes, and was vilified by some Republicans after agreeing to a tax
increase. ``This is a bad idea,''
he said. ``Ask his dad.'' http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=al.9n5U5HFSw |
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